9911796707
TMI Blog2012 (8) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... f survey mentioning that no penalty shall be levied u/s. 271(1)(c) of the IT Act. Since both the issues are common, therefore, both these grounds of the Revenue and the assessee are taken up together for the purpose of disposal. 4. The brief facts of the case are that the assessee is engaged in the business of trading of Ghee, Vanaspati and Refined oil etc. on wholesale basis. Return declaring Nil income has been filed on 30.10.2006. During the course of assessment proceedings, the assessee was asked to furnish replies to the queries raised and details furnished by it. Since no books of account and purchase/sale bills and bills/vouchers for expenses were being produced except copies of purchase bills in respect of transactions with M/s. Satnam Trading Co., survey u/s. 133A has been carried out on 26.12.2008 at the business and factory premises of the assessee. During the course of survey proceedings, the assessee voluntarily disclosed the credit of Rs.1,98,600/- in the name of M/s. Ridhi Sidhi Containers and Rs.26,21,640/- in the name of M/s. Satnam Trading Co. Similarly, amount of Rs.13,09,283/- shown as outstanding liability in the name of M/s. Kothari & Sons, Vyawar has been su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de this office letter dated 22.12.2008, however, no any explanation has been furnished by him. In compliance to summons a written reply was received on 24.12.2008 by speed post through his wife in which it has been stated that her husband Shri Hukum Chand Ahuja is suffering from Cancer and Diabetes and is mentally sick and has gone to Alwar for treatment. Assessee was also asked to produce Shri Hukum Chand Ahuja for examination on oath but he expressed his inability to produce him since he is suffering from Cancer and has gone out of Gwalior for treatment. In view of above facts the entire purchases of Rs. 62,61,350/- shown from M/s Satnam Trading Co., appears to be bogus purchases since the same are not proved. The credit of Rs. 26,21,640/- standing in the name of M/s Satnam Trading Co., also appears to be fictitious liability created by the firm by introducing his own money. In order to verify the genuineness of bank transactions made with M/s Satnam Trading Co., information u/s 133(6) was called for from the Branch Manager, Indus Ind Bank, City Centre Gwalior vide letter dated 05.12.2008 asking him to supply copy of bank account of M/s. Satnam Trading Co., Gwalior for the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed. Therefore, profit of Rs.3639,710/- suppressed by the assessee on account of bogus purchases from M/s. Satnam Trading Co. is added to the total income of the assessee. The assessee has shown liability of Rs.26,21,640/- in the name of M/s. Satnam Trading Co. as on 31.3.2006 against purchase of goods the same is treated as fictitious liability created by the firm by introducing its own money as discussed above. The same is added to the total income of the assessee u/s 68 of the I.T. Act, 1961." 4.2 The additions were challenged before the ld. CIT(A) and the written submissions of the assessee are reproduced in the impugned order, in which the assessee briefly explained that its books of account are maintained regularly and are audited. The books could not be produced during the course of assessment proceedings because the Accountant was not available and the books were lying with him. The Accountant expired later on. This fact was mentioned during the survey proceedings also. However, the purchase bills in respect of purchase of Ghee from M/s. Satnam Trading Co. were produced during the course of assessment proceedings. The assessee made disclosure of Rs.1,98,600/- and Rs.26,21, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine, the purchases cannot be held to be bogus. Copies of the accounts were produced in support of the contention. It was, therefore, pleaded that the addition of Rs.36,39,710/- as bogus purchases is not justified and the same may be deleted. The ld. CIT(A) after considering the explanation of the assessee and the material on record, deleted the addition of Rs.36,39,710/-. He, however, maintained the addition of Rs.28,20,240/- on account of surrendered amount in the revised return. His findings in para 6.2 and 6.3 of the appellate order are reproduced as under : "6.2. Appellant's submissions alongwith the assessment order have been considered carefully. Assessing records and survey folders have also been perused. There is no denying the fact that M/s. Satnam Trading Co with whom the transactions of purchases made by the appellant have been found to be bogus by the AO. is very much inexistence as is evident from the reply in response to summons. Inspector's report and confirmed copy of account given by it to the AO vide letter dt. 4.10.08 in response to AO's letter doted 12.09.08 issued to it. The A.O has made the addition on the ground that some cheques for Rs.18,40,000/- have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of credits surrendered in the name of M/s. Ridhi Sidhi Containers and M/s. Satnam Trading Co. and disclosed in the revised return/ returns filed in response to notice u/s. 148 is confirmed." 5. The ld. DR relied upon the order of the AO and submitted that the assessee made voluntary surrender of Rs.28,20,240/- because the assessee in statement was unable to explain the bogus liabilities and the revised return was also filed surrendering the above amount, on which taxes have also been paid. Therefore, the AO was justified in making the addition. He has submitted that there is no estoppel against the statute. On the other hand, the ld. counsel for the assessee reiterated the submissions mad before the authorities below and referred to page 94 of the paper book, which is Ghee account to show that opening stock was Rs.9,42,425/- and purchases were made of Rs.83,70,850/- and out of the same, sales of Rs.99,14,385/- have been made. He has submitted that the AO called for enquiry from M/s. Satnam Trading Co. u/s. 133(6) in response to which all facts were explained and Inspector's report was not confronted to the assessee. Since the report of the Inspector was not confron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. Further, the assessee has made cash transactions of Rs.18,40,000/- only. Therefore, entire addition against the assessee was unjustified. Further, no evidence has been brought on record that even if one of the partner of the assessee firm signed on the back side of bearer cheque given to M/s. Satnam Trading Co., the amount of cheques have returned to the assessee. In the absence of any material incriminating in nature against the assessee, the ld. CIT(A) on proper appreciation of facts and evidence on record, rightly deleted the addition of Rs.36,39,710/-. Further when the sales have been accepted, there is no question of disputing the purchases because no sales could be made without purchases. Since the party has confirmed the purchases and the purchases have been supported by bills and vouchers, therefore, the explanation of the assessee has been rightly accepted by the ld. CIT(A) for the purpose of deleting the addition. Considering the totality of facts and circumstances, we do not find any justification to interfere with the order of the ld. CIT(A) in deleting the addition of Rs.36,39,710/-. In the result, the departmental appeal has no merit and is dismissed. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affidavit before the ld. CIT(A) on 07.01.2010 (PB-95). In the aforesaid affidavit, the assessee stated that the copy of his statement was not given to him and that the assessee made the surrender subject to no penalty. However, we do not agree with the contention of the ld. counsel for the assessee because such an affidavit was filed after completion of assessment. The survey is conducted on 26.12.2008 and statement of assessee was recorded voluntarily at the time of survey, in which the assessee was unable to explain fictitious liability standing in the name of these two parties. Therefore, the assessee made voluntary surrender of the aforesaid amount for the purpose of taxation. Therefore, the contention of the assessee in the affidavit cannot be accepted because the assessee immediately after surrender of amount in the statement also filed revised return on 29.12.2008 without mentioning anything therein and surrendered the amount of Rs.28,20,240/- for the purpose of taxation. There is no mention of any condition in the revised return and no note has been given in the same. The assessee never disputed his voluntary statement either at the time of survey or at the assessment stage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, submitted that in absence of notice u/s. 143(2), the assessment order is null and void, which was passed u/s. 143(3)/147 of the IT Act. 8. On the other hand, the ld. DR submitted that the notice u/s. 143(2) was issued on 14.09.2007 within the period prescribed under law and that when the assessment proceedings were going on before the AO, survey u/s. 133A was conducted in the premises of the assessee on 26.12.2008 in which the assessee made surrender of Rs.28,20,240/- in respect of fictitious liabilities in the names of M/s. Ridhi Sidhi Containers and M/s. Satnam Trading Company. The assessee immediately filed belated invalid return of income on 29.12.2008 surrendering the amount of Rs.28,20,240/- and paid taxes also. The ld. DR submitted that since the revised return was not valid and the assessee made surrender of the amount in question for the purpose of taxation, therefore, in order to regularize the said belated return, the AO recorded reasons for reopening on 30.12.2008. Therefore, it is strictly not a case of reopening of assessment, but a surrender of additional income, which was only regularized through the above modes and means and as such, there was no need to issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. Since the amount of Rs.28,20,240/- has been disclosed in the revised return (PB-48), therefore, if the AO would have acted on the return u/s. 148, the computation of income should have started from this figure instead of nil and there would be no need to make further additions of Rs.28,20,240/- in the computation of income. It is, therefore, clear that the AO acted and framed the assessment order on the basis of original return of income filed on 30.10.2006. This is also supported by the fact that the assessee filed invalid and belated revised return on 29.12.2008 making surrender of Rs.28,20,240/- and the AO in order to regularize such belated return, recorded the reasons for reopening of assessment on 30.12.2008 subsequent to filing of revised return. The AO in the reasons for regularizing the belated return specifically mentioned that since the revised return is filed beyond the period of limitation u/s. 139(5), therefore, in order to regularize the same, notice u/s. 148 has been issued. It is, therefore, strictly not a case of escapement of income for reopening of assessment, but because of the fact that when regular assessment proceedings were going on before the AO and at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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